The Volkswagen Group is evaluating the potential development of a unified operating system applicable to both electric and combustion engine vehicles, a strategic shift spurred by evolving market conditions in Europe and North America. This consideration, revealed by Cariad, Volkswagen’s software division, represents a possible deviation from the company’s previously steadfast focus on electric mobility.
According to Peter Bosch, head of Cariad, the group is actively assessing methods to maintain the digital capabilities of its current combustion engine models and underlying platforms. While a definitive decision remains pending, the move acknowledges a recalibration of priorities in response to slower than anticipated demand for certain electric vehicle models, prompting a prioritization of conventional and plug-in hybrid vehicle production within certain Volkswagen brands.
The potential change arrives amidst ongoing discussions within the European Union regarding a possible relaxation of the planned ban on new combustion engine vehicle registrations slated for 2035.
While the eventual software supplier remains subject to ongoing evaluations, the US-based partner Rivian, with whom Volkswagen holds a substantial joint venture, is considered a long-term possibility. Cariad could potentially bridge the gap until Rivian’s capabilities are sufficiently developed.
Expanding the unified software platform to encompass combustion engine vehicles would necessitate a significant financial investment – an expenditure that Volkswagen is currently striving to manage efficiently. The group implemented substantial cost-cutting measures in 2024, totaling 15 billion euros. Recent restructuring efforts, led by CEO Oliver Blume, have also resulted in a streamlining of Cariad, including a targeted 30% reduction in German workforce by the end of 2025 and budget constraints following reported losses of 2.43 billion euros.